In the video game industry as in many popular video games themselves, a fierce rivalry has taken center stage. Sony took a commanding early lead and its PlayStation and PlayStation 2 systems are both among best-selling video game consoles of all time at No.4 and No.1, respectively. Then the tide turned and Microsoft’s Xbox 360 edged out the PlayStation 3 in the current generation console wars, having recently posted its 27th consecutive month as the top-selling console in the U.S. But we may soon see this rivalry fade as the missions of Microsoft’s next-generation “Xbox Infinity” and Sony’s PlayStation 4 begin to diverge. More →

While Microsoft’s next Xbox won’t feature virtual reality headsets, it will try to do the next big thing by making your entire living room into a big video game screen. Microsoft on Monday posted a new demonstration video showing off the new Xbox’s IllumiRoom feature that projects aspects of games onto the walls surrounding your television set to increase immersion within virtual environments. The new feature comes with several options for filtering content if you’re not interested in having your entire living room transformed into a game world: For instance, you can choose to only have weapons or enemies displayed on the peripherals of your television set or you can choose to only have the bare outlines of the game environment displayed outside your TV. It goes without saying that IllumiRoom will likely be one of the key features Microsoft shows off when it formally unveils the new Xbox on May 21st. The full video demonstration of IllumiRoom is posted below. More →

In line with earlier rumors, Microsoft on Wednesday invited members of the press to an event next month for its next-generation Xbox gaming system. The new console is rumored to be equipped with an 1.6GHz 8-core AMD processor, 8GB of RAM, an 800MHz graphics processor, a Blu-ray Disc drive and Gigabit Ethernet connectivity. The next-generation Xbox is expected to be released in time for the holiday season. Microsoft will announce the system at a press event on May 21st in Redmond, Washington at 10:00 a.m. PDT.

Microsoft’s gaming console has remained the best-selling system in the United States for the 27th consecutive month, according to new data from NPD Group. The Xbox 360 sold 261,000 units in the U.S. in March, beating out Sony’s PlayStation 3 and Nintendo’s Wii U. As a whole, physical sales were down 10% year-over-year from $1.1 billion in March 2012 to $992.5 million in March 2013. Software sales remained almost flat at $554.8 million, only inching down just 1% from a year ago. The steepest decline came from hardware sales, which dropped a whopping 32% to $221.6 million. Portable consoles are said to have experienced a “stronger decline” than traditional ones, however sales of the Nintendo 3DS grew an estimated 9% year-over-year. Microsoft is expected to introduce an update to the Xbox, possibly called the Xbox 720 this spring.

It’s not only financial analysts who are bearish on the prospects of new gaming consoles from Microsoft (MSFT) and Sony (SNE) — gaming industry pioneers aren’t too optimistic either. In an interview with Gamespot, Bioware cofounder Dr. Greg Zeschuk said that neither the next Xbox nor the PlayStation 4 are likely to fix the “sick market for old-school gaming” that the industry has found itself trapped in recently. Zeschuk, who cofounded the company responsible for the popular Mass Effect and Dragon Age series, went onto say “that unless Microsoft or Sony pull something magically out of a hat, it’s pretty much the same old, same old repackaged,” and that the new consoles will have a minimal impact on the retail market for high-end games.